San Francisco Named Fourth In US Startup Activity

In a report from the Ewing Marion Kauffman Foundation of Kansas City, San Francisco has moved up on the list of the best metropolitan areas in the US for startup activity, climbing from the ninth position in 2015 to fourth in 2016. Considering San Francisco’s reputation as a major hub for startups, this position may seem surprisingly low to some – but to be fair, the study incorporated all types of startups, not just tech companies.

It’s easy to forget that, despite its close proximity, the Silicon Valley is not actually associated with San Francisco in this analysis. Instead, the South Bay falls under the umbrella of the San Jose metropolitan area. Last year, San Jose fell expectedly high on the list, ranking in at number three. This year, though, the South Bay has fallen quite far, landing in the eighth position for 2016. Locals are theorizing that this shift, in which San Francisco has risen and San Jose has fallen, is due largely to the fact that young entrepreneurs today – especially millennials – prefer to live in busy city centers.

The report incorporated information from the Bureau of Labor Statistics, reportedly defining startups as ‘businesses that are less than a year old and employ at least one person in addition to the owner,’ eliminating ‘entrepreneurs who were looking for work just before starting their companies.’ Interestingly enough, the report claimed that startup activity around the country has been increasing over the past two years. Ahead of San Francisco, Austin topped the charts, followed by Miami in second and Los Angeles in third. Other cities on the list included Las Vegas, New York, Houston, Denver, and Phoenix.

Worry not, though – the Bay Area is still leading in several other areas. The Kauffman Foundation published a report ranking ‘metropolitan areas based on the number of initial public offerings relative to the total number of businesses in each area,’ in which San Jose came first and San Francisco came second. Plus, in the same order, San Jose and San Francisco topped the rankings for the percentage of high-growth software companies in 2015.